jts wrote:I think you're confused. If everyone needs more pictures of George Washington so that they can buy burritos, the Fed gives them what they want and the price of burritos stays the same. If everyone needs more bitcoins so that they can buy burritos, the price of burritos will go down.
And since the price of burritos needs to go down, suddenly your friendly neighborhood purveyor of burritos doesn't have as much bitcoin as he expected. He needs the bitcoin to meet various debts (the tortilla guy, the pinto bean guy), so now he's hoarding bitcoin too. And now the tortilla guy isn't moving as many tortilla's as he wanted, so he's hoarding bitcoin so he can pay the flour guy.
Enough burritos for everyone, but not enough pictures of George Washington to buy them with = prices fall. People are swimming in pictures of George Washington, but they're queuing up buy burritos = prices rise.
This is a very simplified picture, of course. If the burrito vendor has too much chopped steak sitting around at the end of the day, he doesn't go out and slash his prices and get all his signs reprinted with the new price the next morning. And we're not just talking about burritos.
And, except in very severe deflationary episodes, the primary problem is corporations hoarding money, not ordinary folk hoarding burrito money in a coffee can.
The physicality of the currency doesn't matter too much. I used dollar bills and burritos to make the underlying logic clear, but primarily the problem is not the "monetary base" (dollar bills lying around in wallets and bank vaults), but "M1", the ostensible quantity of dollar bills that everyone with a savings account thinks they can access. M1 is just as ethereal as bitcoin: it exists in the electronic records of the banking system.
I'm still confused, but I don't really care too much, so don't feel obliged to explain. Thanks for the effort, though!
Well, the most basic thing I want to make clear is why prices go down, not up, when there's not enough currency.
You and six friends go on a vacation to Coconut Island. You each bring 10 dollars. The only thing you can buy on Coconut Island are coconuts. The islanders have exactly seven coconuts this week, and they'll auction the coconuts off to their visitors. You might reasonably predict that each person will be willing to bid their whole 10 dollars for a coconut.
But wait! There are rumors that the government of Coconut Island might announce a new departure tax. If they do, then to leave Coconut Island, everyone will need to pay a 6 dollar fee - in cash. Now everyone needs to hoard some currency in case they have to pay a departure tax. Now when the coconuts are auctioned off, no one will bid more than 4 dollars. The currency shortage has caused prices to fall.
jts wrote:Well, the most basic thing I want to make clear is why prices go down, not up, when there's not enough currency.
You and six friends go on a vacation to Coconut Island. You each bring 10 dollars. The only thing you can buy on Coconut Island are coconuts. The islanders have exactly seven coconuts this week, and they'll auction the coconuts off to their visitors. You might reasonably predict that each person will be willing to bid their whole 10 dollars for a coconut.
But wait! There are rumors that the government of Coconut Island might announce a new departure tax. If they do, then to leave Coconut Island, everyone will need to pay a 6 dollar fee - in cash. Now everyone needs to hoard some currency in case they have to pay a departure tax. Now when the coconuts are auctioned off, no one will bid more than 4 dollars. The currency shortage has caused prices to fall.
This has gone wildly off-topic, however interesting it is. If someone wants to discuss this further please make a thread in offtopic .
I would say there is a (very) long list of features that most of us would like to see before Bitcoin being supported.
On the other hand, if you want to do it and it helps keeping you motivated for the project (kaya) - go for it.
Bitcoin certainly is a very interesting idea and more than that, already has some acceptance. And this acceptance can only increase with new service providers ...
By the way, what development efforts do you estimate for supporting Bitcoin?
Stay out of my territory! (W. White, aka Heisenberg)
Because of the instability of Bitcoin, you would purely use it as a wallet for online purchases and only keep the amount of bitcoins that you will typically spend in a certain timeframe.
As I currently do not know any single other vendor that accepts bitcoin (they all accept PayPal, though) using bitcoin on kaya would be a two-step process for me and probably also for the vast majority of other users here: acquire bitcoin amount needed for kaya with PayPal and then spend it on kaya.
So in my opinion implementing bitcoin can only be motivated by a wish to actively help/push this payment system.
Stay out of my territory! (W. White, aka Heisenberg)
Kaya.gs wrote:This has gone wildly off-topic, however interesting it is. If someone wants to discuss this further please make a thread in offtopic .
Just to bring it back on topic, hyperpape's links and the discussion that followed (thanks for the economics for dummies lesson, jts) are enough to convince me that having to use bitcoin would eliminate my inclination to use any of Kaya.gs's non-free services.
I think Spongebob's point is really the most insightful one about what Kaya should do. Implementing bitcoin would only make sense as an ideological decision to push an idea that you're interested in. Which is fine--I don't begrudge you that right. But there's little upside for Kaya users.
SpongeBob wrote:Because of the instability of Bitcoin, you would purely use it as a wallet for online purchases and only keep the amount of bitcoins that you will typically spend in a certain timeframe.
As I currently do not know any single other vendor that accepts bitcoin (they all accept PayPal, though) using bitcoin on kaya would be a two-step process for me and probably also for the vast majority of other users here: acquire bitcoin amount needed for kaya with PayPal and then spend it on kaya.
So in my opinion implementing bitcoin can only be motivated by a wish to actively help/push this payment system.
this is a more concise, less convoluted version of what I was trying to convey. in theory, bitcoin is a sound concept. in practice, it does not seem to be. so my vote is not to support it, or to support it only as an additional payment option and after other more important features are implemented
Archivist wrote:in theory, bitcoin is a sound concept. in practice, it does not seem to be.
Benjamin Franklin would disagree about the theoretical soundness of bitcoin, I think. He was instrumental in getting the currency of Pennsylvania off the ground, and warned that the Continental Congress needed to be able to tax in order to support the Continental Dollar.
The Adkins Principle: At some point, doesn't thinking have to go on?
— Winona Adkins
There's zero development effort involved in supporting Bitcoin payments. The thing involved is taking the time to convert the Bitcoins that you're paid to USD or Euros and get them into your bank account, which is a non-zero but fairly small amount of periodic effort. (Also, since the Bitcoin exchange rate isn't really stable, recalibrating your BTC prices occasionally.)
Since its ultimately unfair to force users into a currency that could lose all of its value overnight (a very small amount of people hold the majority of bitcoins), the price of things on kaya in bitcoin should be 25% of the exchange rate.
I honestly haven't seen anything that legitimately uses bitcoin, it seems like a currency that is purely a speculation game for users.
badukJr wrote:Since its ultimately unfair to force users into a currency that could lose all of its value overnight (a very small amount of people hold the majority of bitcoins), the price of things on kaya in bitcoin should be 25% of the exchange rate.
That doesn't make any sense. What "forcing?" Why would Kaya be willing to offer such a crazy discount?
badukJr wrote:Since its ultimately unfair to force users into a currency that could lose all of its value overnight (a very small amount of people hold the majority of bitcoins), the price of things on kaya in bitcoin should be 25% of the exchange rate.
That doesn't make any sense. What "forcing?" Why would Kaya be willing to offer such a crazy discount?
Bitcoin can become worthless at any point, it has no backing. If I take the risk to change my money into something that can disappear, I should get a discount. Also, the only other place to use them really is Silk Road on TOR, which sells illicit drugs. Since I don't buy that, I would only be changing into bitcoins to use Kaya. That sucks, honestly.
badukJr wrote:Bitcoin can become worthless at any point, it has no backing. If I take the risk to change my money into something that can disappear, I should get a discount.
The risk of collapse should theoretically be built into the exchange rate. By accepting bitcoins, kaya would be accepting the same risk of collapse, so should not give a discount.
The Adkins Principle: At some point, doesn't thinking have to go on?
— Winona Adkins
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